'Good behaviour' jolt for generators

PETER HAIN, the new energy minister, yesterday confirmed electricity generators' worst fears by saying he planned to reintroduce the controversial market abuse condition into their licences.

The move comes just three months after the Competition Commission sided with two generators and rejected the clause, which energy regulator Callum McCarthy introduced to curb manipulation of wholesale electricity prices. The commission claimed increased competition in the generation market and the introduction of the new wholesale electricity market, Neta, rendered the clause unnecessary.

However, energy regulator Callum McCarthy has convinced Mr Hain that the clause needs to be reintroduced. Under the new Utilities Act, Mr Hain can impose changes to generators' licences, with their only recourse being judicial review. Speaking to inaugurate Neta, which began trading yesterday, Mr Hain said: "Callum has put an argument to me. He's changed [the original market abuse] proposal. I'm very sympathetic to the proposal he's put to me."

The minister added that the new clause would be put out to consultation "very imminently", before being imposed on generators. Mr Hain declined to explain how the new clause differed from that rejected by the Competition Commission. Peter Hollins, chief executive of British Energy, said: "The original Competition Commission findings thoroughly tested Ofgem's case and found it wanting in every respect."